BHAIYALAL SHUKLA v. STATE OF MADHYA PRADESH

Citation: [1962] SUPP. 2 S.C.R. 257; 1961 INSC 363

Court: Supreme Court of India

Bench: BHUVNESHWAR PRASAD SINHA , J.L. KAPUR, M. HIDAYATULLAH, J.C. SHAH, J.R. MUDHOLKAR

Judgment date: 1961-12-31

Case summary

1961 INSC 363. Supreme Court of India judgment dated 1961-12-31. BHAIYALAL SHUKLA v. STATE OF MADHYA PRADESH. Read the judgment and case details on LawSphereX.

Judgment text

2 S. C. R. SUPREME COURT REPORTS 257 BHAIYALAL SHUKLA v. STATE OF MADHYA PRADESH (B. P. SINHA, c. J. , J. L. KAPUR, M. HIDAYATULLAH, J. C. SHAH and J. R. MumrnLKAR, JJ. ) Sales Tax-0. P. and Berar Act . extended to Vindhya Pradesh-Validity-0. P. & Berar Sales Tax Act, 194'1 (21 of 1947), a1 extended to Vindhya Pradesh-Par! 0 States (Laws) Act, 1950, s. 2-Government of Part 0 States Act ( 49 of 1951), ss. 21, 22--Part 0 State8 (Miscellaneous Law•) Repealing Aet (66 of 1951)-Vindhya Pradesh Law8 (Validating) Act (6 of 1952), s. 7-Vindhya Pradesh Sales Tax Ordinance (2 of 1949) -ConBtitution of India Art. 14. The appellant was doing business of construction as contractor under Public Works Department in Vindhya Pradesh, now Madhya Pradesh. He challenged the levy of Sales Tax on building materials cupplied by him for the year 1953-54 to 1958-59.

The contention of the Petitioner was that the tax was not leviable in view of the decision of the Supreme Court in Gannon Dunkerley's case and Pandit Banarsi Das's ca8e. The respondents claimed that the tax was leviable because the case fell within the derision in Mithan Lal's case. The Raj- pramukh of the United S'tate of Vindhya Pradesh promulgated the Vindhya Pradesh Sales Tax Ordinance 2 of 1949. On Vindhya Pradesh becoming Part C State of India the said Ordinance of Rajpramukh was applied to the whole of it with effect from April 1, 1950, by notification No. 7 of March 28, 1951. Under s. 2 of the Part C States (Laws) Act, 1950,. by notification No. S . . R. O. 6 datrd December 29, 1950, the Central Provinces & Berar Sales Tax Act 1947, was extended to Vindhya Pradesh. The notification also added s. 29 to the Madhya Pradeah Act so extended, by which ordinance 2 of 1949 was repealed. By reason of the decision of this Coll! '! in the Delhi Laws Act case the addition of s.

29 was unconsti- tutional. Parliament thon enacted the Part C States (Miac. Laws) Repealing Act (60 of 1951). By s. 2 of the Act the Vindhya Pradesh Sales Tax Ordinance, 1949, was deemed to have been repealed from December 29, 1950. The Vindhya Pradesh Laws (Validity) Art, 1952, also provioed and declared that Central Provinces & Berar Sales Tax Act, 1947, which was extended to Vindhya Pradesh under s. 2 of the Part C States Laws Act, 1950, has been and shall be deemed to be in force in Vindhya Pradesh from April 1, 1951. The said C. P. & Berar Sales 1~a:; Act drfined contract, goods, sales etc. and by these definition the materials used or supplied by 1111 Dtter•m 11. 1981 Buiμ/a/ Shwk/a Y. Stak of M a. /ltya ProJ11h 258 SUPREME OOURT REPORTS [1982) StTPP. a building contractor in the conJtructions etc. were made liable to Sales Tax in accordance with the schedule r. atcs. The question is, whether C. P. & Berar Sales Tax Act, 1947, can be said to have been extended. for the !

"int time by the Vindhya Pradesh lagL,lature in 1952, when it pasoed the Vindhya PradCJh Laws (Validating) Act, 1952 to the exclusion of the order contained in the notification'No. S. R. O. 6 or whether the Act continued to be in force in Vindhya Pradesh even before and all that the Vindhya Pradesh Act did as to remove any doubts about its validity. The rival cont,ntions of the appellant and the rcspon. dents are reduced to the proposition that if the State Legisla· ture of Vindhva Pradesh extended the Central Province and Berar Sales Tax Act, the extended Act would suffer from di Knkerley'a caae, and the matter was covered bv Millian Lal'• ca. te. Even if the notification S. R. O. No. 6 failed to repeal Ordinance 2 of 1949 Parliament bv its own law efl'aCl'd that ordinance in Vindhva Prad"'h from December 29, 1950, and enacted that that Ordinance shall be deemed to be repealed from that day. The Ordinance 2 of I 949 did not continue in Vindhya Pradesh down to January 8, 1953. becau.

e bv fiction the Ordinance was repealed from December 29, 1950. Held. also, that the laws in different portions of new State of Madhya Pradeoh were enacted by different lcgisla· tures and under s. 119 of the States Reorganisation Act, all 2 S. C. R. SUPREME COURT REPORTS 259 laws in force in a state were to continue until repealed or altered by the appropriate Legislature. The different sales• tax laws in different parts of Madhya Pradesh are valid on the grnund that the differentiation arises from historical reason•, and a geographical classification based on historical rea•ons is not affected by Art. 14 of the Constitution. State of Madra• v. Gannon Dunkerley & Oo. [1959] S. O. R. 379, Pandit Banar8idas v. State of Madhya Prade•h, [1959] S. O. R. 427. Mithan Lal v. State of Delhi, [1959] S. O. R. 445, Jn re the Delhi Law• Act, 1912, [1951] S. O. R. 747, Gannon Dunkerley v. State of Madra•, [1954] 5 S. T. O. '216, Behram Khurshed Pe8ikaka v. The State ~f Bombay, [1955] 1. S. O. R.

613, Deepchand v. State of Utlar Prade•h, [1959] Supp. 2 S. 0. R. 8, John M. Wilker'9on v. Charles A. Rahrer, (1891) 140 U. S. 545, M. K. Prithi Rajji v. State of Raja•than C. A. No. 327/56 decided on 2-11-60 and Stale of Madhya Pradeah v. The Gwalior S'U{Jar Oo. Ltd. C. A. Nos. 98 and 99 of 1957 decided on 30-11-1960, referred to. ORIGINAL JURISDICTION : Petitions Nos. 110 to 115 ofl960. (Under Article 32 of the Constitution of India for enforcement of Fundamental Rights) A. V. Viswanatha Sastri, R. K. Garg, D. P. Singk, S. 0. Aggarwal and M. K. Ramamurthi, for the Petitioner. B. Sen, B. K. B. Naidu and J. N. Shroff, for the Respondents. 1961. December 21. The Judgment of the Court was delivered by HIDAYATULLAH, J. -These six petitions under Art. 32 of the Constitution have been filed by one Bhaiyalal Shukla, who was doing business of cons- truction of buildings, roads, bridges etc.

as con- tractor for the Public Works Department in Rewa Circle of the former Vindhya Pradesh State, now a part of the State of Madhya Pradesh. By these petitions, he "challenges the levy of sales tax on building matnials supplied by him in the cons- truction of buildings, roads and bridges for the years, 1953-54 to 1958. G9. For the first year in question, sales tax amounting to Rs. 1,840·5-Cl has . 1981 Bllajyal•I SluJcla Y; St•te •f Modh7• Pradesh HiJ""""""" I. 1961 BltaiJalal Sliokla '" Stcteof M. ala. 1• frd(f,14 HidavaJu//ah . J, 260 SUPREME COURT REPORTS [1962] SUPP. already been charged and paid. He seeks refund of this a. mount. For the remaining years except the last two, proceedings for assessment have been completed, but the amounta have not been paid. For the remaining two years, proceedings are pending for assessment of the tax. The respon.

dents in the oase are the State of Madhya Pradesh, which Htands substituted for the State of Vindbya Pradesh, and diverse officel'8 connected with the &sseasment and levy of the tax. The contention of the petitioner is that the tax is not levi&ble in view of the decisions of this Court in two cases reported in The Stare of . Madras v. Gannon Dunkerky and Co. , (Madras) Ltd. , (1) and Pandit Banarsidas v, The State of Madhya Prade,sh ('). The respondent. , however, claim that the tax is leviab]e, because the cnse fa. Ila within the decision of this Court reported in Mithan Lal T, The Stale of Delhi('). Tho Unit-Od State of Vindhya Pradesh was formed by the Rulers of the States in Bal(helkhand and Bundhelkhand, who agreed to unite into a common State, with the Maharaja of R11wa as the Rajpramukh.

By the Covenant which w&e entered into by them at that time, it was provided that until a Constitution for the United State was formed, the legislative authority of the United State would ve~t in the Rajpramukh, and he was autho· rised to make and promul!! ate Ordinances for the peace and good government of the United State or any part thereof, and any Ordinance made by him had the force of an Act passed by the legisl&ture of the United State. The Rajpramukh. in exercise of his powers drawn from the Covenant, promul(! ated the Vindhya Pradesh Sales Tax Ordinance 2 of 1949 for the levy of a tax on the sale of goods in Vindhya Pradesh. On the ina. usrurstion of the present Constitution of (I) ! 195"J S. C. R. 379. (2) [1959] S. C. R. 427. (3) [1959] S. C. R. 445. 2 S. C. R.

SUPREME COURT REPORTS 261 India, Vindhya Pradesh became, at first, a part B State but later by the Constitution (Amendment of the First and Fourth Schedules) Order, 1950, it was transferred from Part B to Part C of the Constitu- tion. The Ordinance of the Rajpramukh was ap- plied to the whole of Vindhya Pradesh with effect from April l, 1950 by Notification No. 7 of March 28, 1950 by the Chief Commissioner, Vindhya Pra- desh, acting under s. 1(2) of the Ordinance. Parliament then passed the Part C States (Laws) Act, 1950. Section 2 oft. hat Act provided : "Pawer to extend enactments to certain Part C States :-The Central Government may, by notification in the Official Gazette extend to any Part C State .........

or to any part of such State, with such restrictions and modifications as it th,inks fit, any enactment which is in force in a Part A State at the date of the noti- fication and provision may be made in any enactment so extended for the repeal or amendment of any corresponding law (other than a Central Act) 'Which is for the time being applicable to that Part C State. " In exercise of the power conferred by the above section, the Central Government by Notifica- tion No. S. R. O. 6 dated December 29, 1950, exten- ded to the State of Vindhya Pradesh the Central Provinces and Berar l:lales Tax Act, 1947 (21 of 1947) as in force for the time being in the State of Madhya Pradesh, subject to certain modifications necessitated by the application of the Act to this new area. By the same Notification, a new section was added to the Madhya. Pradesh Act, which read as follows: "29. Repeal and Saving : The Vindhya Pradesh Sales Tax Ordinance 2· of 1949 is hereby repealed, provided that .........

," and here follow certain provisions saving the pre· vious operation of the Ordinance. IIMI Bluiryalal Shuk1 v. State of Madhya Pradesl Hiduyatul/ah J, 1961 Bliaflo/111 SW/o y, SI. ii of M UJuo Pr. Jtsh llid'f1Clulla4 J · 262 SUPREME COURT REPORTS [ll:l! s~] SUl'l'. On March 20, 1951, tho Central Government issued Notification No. 52/ECON. in exercise of tho powers conferred by sub-a. (3) of s. l of the Central Provinces and Berar Sales Tax Act, 1947, as exten- ded to tho State of Vindhya Pradesh by ~otification No. S. R. O. 6, ordering that from April l, 1951 the extended Act would come into force in the State of Vindhya Pradeeh. On May 23, 1951, this Court rendered its judgment in In re the Dellli Laws Act 1912(' ). It was held by majority by this Court thats.

2 of the Part C States (Laws) Aot, 1950 was intra vires, except for the concluding sentence, "provision may be made in any enactment so exten- ded for the repeal or amendment of any corres- ponding law (other than a Central Act) which is for the time being applicable to that Part C State", ina. Hmuch as it was uUra vires the Indian Parlia· ment. Parliament then passed the Government C;f Part C States Act, 1951 (49 of 1951) on September 6, 1951. Under that Act, Legislative A880mblies were set up, and under s. ~l, they· were investRd, subject to certain limitations, with Powers· of legislation with respect to any of the matters enumerated in the State List or in the Concurrent List.

Section 22 of that Act provided : "If any provision of a law made by the Legislative Assembly of a State is repugnant to any provision of a law made by Parlia- ment, then the law made by Parliamont whether passed before or after the law made by the Legislative Asaembly of the State, shall prevail and tho law made by the Legislative Assembly c•f the State hhall, to the extent of the repugnancy, be void. Explanation : For the purposes of this section, the expression 'law made by Parlia- ment' shall not molude any law which provides (I) [1951] S. C, R. 747. • 2 S. C. R. SUPREME COURT REPORTS 263 for the extension to the State of any law in force in any other part of the territory of India. " In view of the decision of this Court in the Delhi Laws Act case('), the· Part C States (Miscellaneous Law) Repealing Act, 1951 (66 of 1951) waa enacted by Parliament on October 31, 1951. Bys.

2 of that Act, laws described in Column 2 of its Schedule were repealed or were deemed to have been repealed with effect from the dates specified in the corres- ponding entry in column 3 of that Schedule. In the Schedule, the Vindhya Pradesh Sales Tax Ordi- nance, 1949 (2 of 1049) wa. s repealed from Decem- ber 29, 1950. The Vindhya Pradesh Legislative Assembly, which was set up, then pqssed the . Vindhya Pradesh Laws (Validating) Act, 1952 (6 of 1952). By that Act, which was ·to extend to the whole of Vfodhya Pradesh and to come into force on January 8, 1953, it was provided as follows : "2. For the removal of all doubts it is hereby declared that ......... Central Provinces and Berar Sales Tax Act, 194 7 as extended to Vindhya Pradesh under section 2 of the Part C States Laws Act, 1950 (has been) and shall be deemed to be in force in Vindhya Pradesh from April 1, 1951. 7.

Repeal and savings :-As from the dates of the actual enforcement of the Acts specified in section 2 of this Act the oorr~sponding laws in force in Vindhya Pradesh immediately before the said dates shall be deemed to have been repealed without prejudice to anything done or suffered thereunder or any right, pri- vilege, obligation or liability acquired, a. corned or incurred thereunder before the aforesaid dates. " Section 2 of the Central Provinces and Berar Sales Tax Act, 1947, which was extended to (I) [19Sl] S. C. R. 747. 1;61 Bhai;>alal Shukla v State of Madhya Pradesh Hidayatullah J. 1H1 llltM,. tal 8INIJ:l• v. SW.

of Iii sponding laws in force in Vindhya Pradesh immediately before the said dates shall b" deemed to have been repealed without pt>rj11dicfl to anything done or suffered thereunder or any right, privilege, obligation or liability acquired, accrm·d or incurred thercundn before the aforesaid dates " It is said that, if the two sections are read to~ether they mean that the Central Provinces R! ld Berar Sales Tax Act was freFhly extt·nded from April l, 1951 by the VindhyaPrad('sh Act and any Jaw made by any authority earlier was freshly repealed to make room for tlio extension. This argument, in our opinion, is erroneous. To begin with, the powers of the Vindhya Pradesh . Legislature were circumscribed hy s. !? 2 of the Government of part C Stat<>s Act, 1951, quoted earlier. Under that section, tl1e powers of the State f. Rgislatures did not extend to making Jaws repugnant to any law made by Parliament.

The Explanation defines the expreBBion "law made by Parliamc,nt", and excludes a law which provides for the extension to the State of any law in form! • ... 2 S. C. R. SUPREME COURT REPORTS 273 in any other part of the territory of India. The Vindhya Pradesh Legislature, however, did not repeal either s. 2 of the Part C States (Laws) Act or the Notification, and all that the Legislature did was to add its own authority by a declaration, to the laws earlier extended. The law was extended first by Notification S. R. O. No. 6 on December 29, 1950, but it was brought into force only by Noti- fication No. 52 (Econ. ) dated March 20, l! J50 from April 1, 1951. The Notification, S. R. O. No. 6 had substituted for sub-s. (3) of s. l of the Central Provinces and Berar Sales Tax Act, the following : ''(3) It shall come into force on such date as may be notified by the Central Government in the Official Gazette. " Till the Notification No. 52 (Econ.

) was made, the Act was extended but was not in force in Vindhya Pradesh. There is a difference between the extension of a law subject to its being brought into force latter anti its coming into force on a later date. Section 7 of Act 6of1952 repealed only the lawsinforceprior tn the date on which the Central Provinces and Berar Sales Tax Act wa8 brought into force. It speaks of "laws in force in Vindhya Pradesh immedi- ately before April J, 1951 ", and the law which was in force immediately before that date was not the Central Provinces and Berar Sales Tax Act which had not been brought into force, but might be Ordinance 2 of 1949, if it had not been successfully repealed earlier. The former Act wa,s extended on December 29, 1950, but was not brought into force till April 1, 1951, an h Hid. ,. tuUoA J. 274 SUPREME COURT REPORTS [1962] SUPP. from April I, 1951 (if repeal was at all necessary) Ordinance :!

of 1949, which might be supposed to have continued as law till October 31, 1951, when it was repealed by Act 66 of 1951. In point of fact and altio in law, it was really repealed from Decem- ber 29, 1950 under the Repealing Act 66 of 1951. The Vindhya Pradesh Act 6 of 1952 cannot, tht>re- fore, he said to havo enacted for tlw first time that the CPntral Provinces and Berar Sales Tax Act ~hall come into force from April I, 1951 in Vindhya. Prad gislature to removr do11hts and to save tho law from any attack on the ground that the wrong Legi. slature had repeal· ed tho Or1linance or extended th" Central Provinces and Berar Sales Tax Aet. In our opinion, this argu· mcnt cannot be aecepti>d. Ont> further argument was advanced to which we have not reforred so far, and which may now be noti,,cd.

It is th'lt after the reorgani€ation of the States, Madhya Pradesh has as many as four Sales Tax Act"· It is contended that a person belonging to the are;i of the former State of M11dhya Pradesh is not liable to sales tax on buildi11iz Jlllllt·rials in a works contrac:t under the Central Provinces and Iler:i. r Sales Tax Aet becaUo<' of the decision in Pandit Rrmarsi Das's cast-('), but another person living in the area forming part of the formn Vindhyn Pradesh is liable to sales tax undn the 3am·1 At'! , as extended to Vinrlh~·a PradeHh. This, it is saiil, is patently contrary to the spirit of the equal pr"tcction clau8o in Art. 14. The laws in different portions of the new State of Madhya Pradesh were enacwd by different Legis· latnres, and under s. 119 of the States R"'organiBation ~1JlJ95'1] S. C. R. 427. r 2 S. C. R. SUPREME COURT REPORTS 275 Aot, all laws in force are to continue until repealed or altered by the appropriate Legislature.

We have already held that the sale tax law in Vindhya Pradesh w\l. s validly enacted, and it brought its validity with it under s. 119 of the States Reorganisa- tion Act, when it became a part of the State of Madhya Pradesh. Thereafter, the different laws in different parts of Madhya Pradesh can be sus- tained on the ground that the differentiation arises from historical reasons, and a geographical classi- fication based on historical reasons ha,s been upheld by this Court in M. K. Prithi Rajji v, The State of Rajasthan(') and again in The State of Madhya Pradesh v. The Gwalior Sugar Oo. Ltd. ( 2 ). The latter case is important, because the sugarcane cess lev,ied in the former Gwalior State but not in the rest of Madhya Bharat of which it formed a part, was challenged on the same ground as here, but was upheld as not affected by Art. 14. We, therefore, reject this argument.

In the result, the Writ Petitions fail, and are dismissed; but in the circumstances of the case we make no order about costs. P etitians dismissed (ll Civil Appeal No. 327of1956 decided on November 2, 1960. (2) Civil Appeai. No!. 9R and 99of1%7 decided on ·November 30, 1960. • 1961 Bh•iJ! •l•I Shuk/o v. Stoll of Madhya Pradesh Hidayatu//ah J

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